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Bw/Harris Poll: Still Putting Their Marbles On The Market

December 28, 1997

Where to Invest in 1998 -- Strategies for Stocks: VOX POPULI

BW/HARRIS POLL: STILL PUTTING THEIR MARBLES ON THE MARKET

Investors remain stuck on stocks. Few admit to panic selling in the wake of Asia's economic debacle, and most have no plans to cut their equity holdings in the coming year. True, more than half think a market crash is at least somewhat likely in the next 12 months, and a full 62% consider stocks overvalued.

Even so, and in spite of the Asian jitters, bullishness prevails. In fact, investors' expectations for their long-run returns from stocks are higher now than in mid-1996. Many think international stocks, beaten down this year, now are a good buy, and a surprising number favor the technology sector, another recent loser.

Note: This is a an extended version of the BW/Harris poll that appears in the December 29, 1997, issue of Business Week.

BEST BETS

If you had to choose the one investment that you think would be the best to make right now, which would it be?

1997 1996 1989

Real estate 33% 25% 40%

Mutual funds 21% 24% 8%

Common stock 11% 10% 5%

Bank or saving &

loan deposits 10% 8% 8%

Government bonds 5% 9% 15%

Money-market funds 5% 6% 11%

Gold or other

precious metals 4% 7% 8%

Corporate bonds 4% 2% 3%

I don't save or

invest at all 2% 3% NA

Not sure 5% 6% 2%

ASSET ALLOCATION

What percentage of your household's total assets does each of the following account for? (Results total less than 100%)

Real estate 40%

Savings instruments and cash 29%

Stocks 10%

Bonds 4%

Other 9%

THE SHORT TERM

Over the next six months, do you think you will probably invest a lot more in stocks or stock mutual funds, invest somewhat more in stocks or stock mutual funds, reduce your investment in stocks or stock mutual funds somewhat, or reduce your investments a lot?

1997 1996

Invest a lot more 5% 5%

Invest somewhat more 22% 22%

Reduce somewhat 10% 12%

Reduce a lot 13% 18%

Stay the same 22% 21%

I don't save or invest 21% 20%

Not sure 7% 2%

TAKING STOCK

Over the next year, do you think stocks will go up, stay about the same, or go down?

1997 1996 1989

Go up 38% 39% 36%

Stay about the same 39% 36% 38%

Go down 16% 19% 18%

Not sure 7% 6% 8%

BUYING SHARES

Have you bought common stocks or shares in a stock mutual fund within the past year or not?

1997 1996 1989

Have bought 24% 21% 15%

Have not bought 75% 78% 84%

Not sure 1% 1% 1%

GOING LONG

[For stock investors] In the long run, what sort of total returns (capital gains plus dividends) do you expect the stock market to produce for you?

1997 1996

Below 5% a year 4% 8%

5% to below 10% a year 27% 36%

10% to below 12% a year 29% 29%

12% to below 15% a year 21% 13%

15% or higher a year 14% 9%

Not sure 5% 5%

MEASURING THE MARKET

[For stock investors] Overall, how would you describe the stock market's valuation?

Very overvalued 10%

Somewhat overvalued 52%

Fairly valued 27%

Somewhat undervalued 6%

Very undervalued 2%

Not sure 3%

CRISIS RESPONSE

[For stock investors] How did you respond when the crisis in Asia drove stocks down sharply last Oct. 27?

Bought stock 6%

Sold all stock 0%

Sold some stock 2%

Switched money into bonds 1%

Didn't change holdings 90%

Not sure 1%

CRASH TEST

Over the next 12 months, how would you rate the chance of another big crash in the stock market?

1997 1996 1989

Very likely 14% 12% 12%

Somewhat likely 43% 35% 28%

Not very likely 30% 35% 40%

Not likely at all 9% 15% 17%

Not sure 4% 3% 3%

HUNTING FOR BEARS

[For stock investors] Over the next 12 months, what is the likelihood that the stock market will enter into a prolonged downturn lasting a year or longer?

Very likely 3%

Somewhat likely 21%

Not very likely 60%

Not likely at all 15%

Not sure 1%

GLOBAL OUTLOOK

[For stock investors] Which of these statements best describes your attitude toward international stocks?

International stocks are overvalued,

even after their recent decline 30%

International stocks are fairly valued

and a good deal now 33%

International stocks are selling at

bargain prices and look very attractive 19%

Not sure 18%

TECHNOLOGY TRAIL

[For stock investors] Over the next 12 months, how do you expect technology stocks will perform, compared to the broader stock market?

Significantly outperform 11%

Somewhat outperform 40%

Perform about the same 30%

Somewhat underperform 12%

Significantly underperform 2%

Not sure 5%EDITED BY KEITH H. HAMMONDS Survey of 912 adults conducted Dec. 11-15, 1997 for Business Week by Louis Harris & Associates Inc.Return to top